IT diffusion model in Singapore was adopted in the early s to prepare the country for the next phase of its future development. IT diffusion was known as IT in which information technology resource were used throughout the country to give considerable development the e-commerce and IT outsourcing in the country. The Ministry of Education developed IT Master plan in the early to revolutionize the learning process in the country.
The master plan was not only targeted to increase the learning of individuals to teach computer literacy and information technology but to increase the linkage between learning institutions in IT and the world around it to encourage creative thinking and to generate innovative process to promote education and administrative excellence in the country Tang and Ang, The diffusion of information technology was broadly divided into two main levels including macro and micro levels.
The macro level model was focused to aggregate various numbers of adoptions considering the user population in the entire diffusion process based on adoption, the numbers of adopters at a time and peak level in adoptions. Users are connected by some social or communication network in this model which allows items to be diffused using the neighboring adopters.
The micro-level diffusion was based on modeling each user in their local adoption decisions and in the development of this model, complete knowledge of user to user relationship is essential and the knowledge of influential probability between the two neighboring users. In the development and promotions of IT outsourcing and e-commerce, the diffusion of IT model in Singapore has played a very important role in the Southeast Asia which influenced the other countries to increase their attention on the development and excellence of information technology and to grow their businesses significantly Luu et al.
Emerging markets are those markets where most of IT outsourcing profits is made and investing consultants help emerging nations to privatize their telecom sector. Outsourcing is associated with assurance of technology connectivity in the areas where it provides low-cost labor worldwide. Outsourcing is also determined as intermediating user organizational functions or transacting through a business contract or deal in terms of market based activities. The information technology market has grown rapidly in the recent years in the emerging markets of the world including the United States.
There were some short-term and long-term factors behind the purchase of information technology services based on discrete or project based purchase. In the short-term nature of outsourcing, there was a need reduce costs of the projects due to the current economic conditions while in the long-term outsourcing, the capabilities of the organizations were increased to get an access to new technology solutions through IT utility services like website hosting. In order to know whether or not information technology should be outsourced and to keep the operations domestic, it is necessary to know what potential benefits are associated with information technology outsourcing.
The outsourcing of information technology reduces the operational costs of the business, increases knowledge and awareness of latest technologies and enhances customer satisfaction through best quality IT outsourcing services at lower costs. Both the short-term and long-term factors are responsible for the continuous increase in information technology outsourcing. Short-term factors of IT outsourcing are associated with the need to reduce costs due to economic declining conditions of the world and long-term outsourcing increases the capability of delivering continuous access to latest technology solutions through IT utility Liao and Reategui, In order to examine the research question to know is it worth not to outsource information technology and keep operations domestic, outsourcing of information technology in emerging marketing like Asia, the Middle East, South Africa and Africa shows great appeal for many organizations to outsource their IT projects and to get quality work in limited resources.
The outsourcing of information technology in emerging markets means companies develop partnership with service providing companies that establish legal and physical presence in the entered countries, setup necessary systems and processes and develop strong net of local relationship.
The outsourcing of IT projects in the emerging markets indicates that multinational and domestic businesses are facing almost similar conditions in these markets, while their outlook and geographical condition differs. Outsourcing gives speed and scalability to the information technology projects as different companies in the developed world can outsource their business requirements to those who are well established service providers than building up own infrastructure Data, When user organization outsource their information technology projects to service Provider Company in another country, it gets cost advantage both in labor and raw materials, and achieve highest level of productivity due to low wages benefits.
In outsourcing IT projects in different areas, the user organization enjoys highest value of chain integration as it gets extensive integration with suppliers and customers. The more integrated the company is with its suppliers, the more benefits it can develop from such a relationship and strengthen their supply chain management against their competitors and achieves excellent position at their local markets. IT outsourcing also offers opportunities for retail market operations where user firms can accelerate their operations due to modernization, foreign investment, consolidation and privatization.
Outsourcing of information technology becomes worthwhile for user organization depending on many factors that influence decision of IT outsourcing based on financial, resource, strategic, managerial and cultural concerns. All these broad categories suggest that outsourcing of IT projects is based on series of forces that work either in favor of outsourcing or against outsourcing. The interaction of these forces finally mold management decision making to outsource or not in the emerging markets.
All these factors suggest that outsourcing of information technology is beneficial to the user organization that reduces its financial costs, improves financial index performance, improve cash flows, leverage financial strengths, get an access to external expertise and technologies that are not possible without outsourcing of information technology, build mergers and acquisitions and business transitions, reduce project delivery lead time, enhance business focus, ease globalization, build strategic partnership with experts, ease performance measurements and gives overall solution to the user organization to get best services at lower costs Liao and Reategui, Management of IT outsourcing is based on the management of workers who work for the development of desired technology abroad.
It is not an easy task to do because it is associated with cultural differences to manage in outsourcing the IT projects. The outsourcing activities of a firm have become a very important issue in the modern day world with politics, welfare economics, international business and business management. The management of IT outsourcing is not a new phenomenon and getting development of information technology projects in locations other than the country in which they are used by the user organization.
The world has seen dramatic increase in the outsourcing of information technology in which domestic firm sends some part of value added activities, whether the development of payroll systems in IT, the development of inventory or ERP systems, or software writing developed for another country continuing to sell its output into the domestic market. It helps domestic customer to transfer money to foreign producers other than local by draining liquidity out of the domestic economy.
The phenomenon has developed the management of global firm in IT outsourcing to generate value for product design, manufacturing, support of services sector, services support, distribution services, customer services and the development of different software development projects.
All these activities are performed in multiple differentiated locations all over the world by using intra-firm trading activities to tie up operations into an efficient whole, and then selling unique mix of goods and services at differentiated market places around the world and enhancing the position of these goods and services to original home market Tallman, The management of IT outsourcing in the global firm has led to significant increase in the exploration of new knowledge and expertise, cost savings and improvements in the bottom line.
Some companies have even achieved greater returns by outsourcing their projects worldwide and using their global partners to drive innovative strategies to develop new software, innovative products and services in the information technology, faster service time-to-market and their successful entrance into new markets. It has made considerable shift of traditional outsourcing to the collaboration globally and getting competitive advantage over time without any need to be restricted their operations within the domestic markets.
The outsourcing of information technology is worthwhile to the business organizations as it has increased their efficiency, increased global technology standards with open architectures, and developed a powerful collaboration tools and infrastructure by outsourcing their IT projects. Furthermore, the global collaboration of the information technology has aligned strategic development, organizational design, product development, program and project management, platform specification and intellectual property management of the organization involved in the outsourcing of their information technology projects at the global level MacCormack et al.
Some large business organizations are successfully outsourcing their information technology operations to reduce costs. The report identifies is it worth not to outsource information technology and keep operations domestic. But the outsourcing of information technology projects have increased in the recent years and business organizations prefer to outsource their projects meeting their business needs.
Different factors have contributed greatly in the outsourcing of IT projects with reduced costs, enhanced productivity, higher quality of IT development, higher level of customer satisfaction, time to market and focusing on the main areas of the benefits of outsourcing. The outsourcing of information technology is based on delegation of some or all IT tasks to professionals in other countries.
These tasks are offered to them to enhance the quality of work and considering the IT related activities in business processes, internal activities, and services to external providers who manage and administer these activities according to already decided deliverables and performance standards. But considering some risk factors in IT outsourcing it is essential that organizations should be careful in planning of what knowledge to be kept in-house and what to be outsourced.
Companies can also face some other risks to outsource information technology in the formulation of scope and decision making on budget and schedule estimates Dhar and Balakrishnan Business world has shrunk in the recent years and same trends of outsourcing information technology have also been adopted by the IT industry unlike traditional models of economy.
The level of communication has increased in the modern world and it is now possible to transfer the information across the globe in no time and at lower costs. It is not essential to produce goods at the site of consumption as the consumer of information not cares where the information is generated and how much time it will take to be on time. The non-tangible nature of the information technology has made this business highly attractive to be outsourced to highly qualified professionals.
Is it worth not outsourcing information technology and keeping operations domestic is not good in the modern world because IT outsourcing is associated with knowledge and learning produced through outsourced activities and business processes. In outsourcing, the property or decision rights of a user organization over information technology are transferred to an external organization.
The IT outsourcing is based on high expectations of the user organization but it is also associated with some bitter disappointments. But despite these growth patterns, both the user organization and the vendors are struggling to realize about the value proposition of outsourcing as vendors deliver economic and management benefits to their customers outweighing contractual costs Levina and Ross Since the early , business organizations are using outsourcing of information technology IT to get the benefits of best services from worldwide at reduced costs.
Early period of outsourcing was associated with the extraordinary benefits of saving operational costs, but in the recent times, the motivation to outsource IT projects has been shifted to strategic business performance improvements. Large numbers of IT functions has been outsourced like programming of business projects, applications development, desktop applications development, telecommunication management and operational systems. The associated value of knowledge and learning in outsourced activities has given new prospects to the outsourcing industry that has grown with a rapid pace in the recent years.
In performing some activity, business organizations learn more about the development of some specific product or service. It gives greater knowledge to the business organizations to be competitive with their competitors after getting the development of their outsourced projects at reduced costs with extraordinary benefits. But at the same time, outsourcing of IT projects cause some severe problems to the pervasiveness in IT functions of most of the business organizations.
The lack of appropriate IT resources that the user organization outsources may reduce the capability of the organization to compete well. The business outsourcing can be done anywhere at any time; whether business projects are small or large, simple or based on huge complexity.
In the industrial society, outsourcing was expanded to the manufacturing industry to get the reduction in costs after great depression period in Western economies. Most of the large business organizations outsourced their manufacturing operations like outsourcing of automobile to different producers and metal, glass and rubber products.
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